Contractor Pay Cap Reduction Killed

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A Yellow Pages Caucus was formed in Feb. 2012 to try to open up bidding for services performed by the government that can be done by private contractors.

U.S. lawmakers may be looking to reduce the nation’s deficit, but they won’t be taking pay away from employees who work for the government’s army of contractors.

Congress has decided to keep reimbursing federal contractors as much as $763,000 annually for a single employee’s pay.

Under current law, that’s the maximum that contractors can bill the Pentagon for an employee’s work, according to a formula that’s pegged to private-sector executive compensation.

The Democratic-controlled Senate this year passed a provision reducing the cap to $230,700, the level of the vice president’s salary. The Republican-led House left the measure out of its version of the bill.

In a victory for the defense industry, the final version of the legislation doesn’t include a reduced pay cap. It does call for a report on the potential effects of lowering the reimbursement level.

The Professional Services Council, a contractors’ trade group in Arlington, Virginia, praised the decision.

“PSC remains opposed to any proposal that would drive critical skills away from the federal marketplace, whether it’s a cap on federal employee compensation or contractor compensation,” Stan Soloway, the group’s CEO, said in a statement.

The pay cap limits how much the government will reimburse contractors, not how much the companies can pay their employees. The bill is H.R. 4310.

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